Telford Homes on track for record profits as it boosts build-to-rent deals

One of Telford's schemes in east London
One of Telford's schemes in east London

Telford Homes is on track to make record profits and revenue this year as it boosts its pipeline of build-to-rent properties.

The company, which builds homes in more affordable areas of the capital, said that it expected pre-tax profit to be "slightly ahead" of expectations.

    As London's market grows more volatile the company has increasingly spread its mix of sales between individual landlords, owner-occupiers, and build-to-rent, constructing apartment blocks and selling them off to institutional investors such as M&G.

    Jon DiStefano, the chief executive, said: "There's no let-up in the demand from the investment community for this kind of product, and they are accelerating investment."

    The company's operations in this growing sector will increase in the next 12 months, as it looks to build long-term partnerships in order to buy the land and plan the building with the client who will end up buying it. 

    Its pipeline of such buildings is now 483 homes, worth £232m, out of a total of about 4,000. Mr DiStefano added: "We don't see any reason why [built-to-rent homes] won't be half of what we are delivering, with multiple thousands in the pipeline. It could be in excess of 2,000 in the future and growing from there as well.

    "The Government and the mayor of London are getting behind it as a sector and it's important for us to be at the forefront of it."

    The company said that these deals were helpful in "providing certainty over future revenues and cash flows, needing no debt finance and delivering strong returns on capital."

    Analysts at Cannacord Genuity said: "The build-to-rent transactions have de-risked the pipeline as well as the balance sheet, and position the group well to balance operational and financial risk with accelerating growth going forward as it so chooses."

    The company added: "In the last few months the non-prime London housing market has remained robust, despite economic and political uncertainty, underpinned by a chronic imbalance between the supply and demand for new homes, particularly at the group’s typical price point." Telford's average selling price is £517,000.

    Overall, its development pipeline is worth more than £1.3bn, and it said that more than 80pc of anticipated gross profit for the next financial year has already been secured.

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